Home builders group calls for action on mortgage rules, labour shortage

Canada is on the right track but won't reach its target of building 5.8 million new homes in the coming decade unless it loosens mortgage rules, addresses the labour shortage and helps to boost production of factory-built homes, says the Canadian Home Builders' Association (CHBA).

«Things are moving in the right direction. We have a long way to go. We are nowhere near capable of doubling housing starts at this time,» CHBA CEO Kevin Lee said Thursday.

«The fundamental piece right now is to be able to get first-time buyers into the market.»

Lee was in Ottawa Thursday delivering the CHBA's Sector Transition Strategy, a report he said offers options to help build enough homes to address the housing crisis.

The CHBA said that higher interest rates and an amortization period restricted to 25 years for uninsured mortgages have priced first-time buyers out of the market.

«In simple terms, you can't build houses if people can't afford to buy them,» Lee said.

Right now, buyers who purchase with a deposit of less than 20 per cent are required by the Canada Mortgage and Housing Corporation to purchase mortgage insurance, and their maximum amortization period is restricted to 25 years.

Expanding amortization

To bring down mortgage payments, the CHBA said the federal government should expand amortization periods to 30 years for newly-constructed homes with insured mortgages.

Doing that would encourage «new construction and new units and create more supply without» driving up prices in the existing housing market, the CHBA said Thursday.

To tame a hot housing market, the Harper government reduced amortization periods for insured mortgages from 40 to 35 years in 2008, from 35 to 30 years in 2011 and then again from 30 to 25 years in 2012.

Lee